To ensure stable growth in its business and commercial services department, STCU has pivoted to a relationship-based model.
The credit union has gone as far as to strike the word “loan” from its titles and job functions.
When Brendan Wiechert joined STCU ($3.3B, Liberty Lake, WA) as the director of commercial and business services in December 2017, he found a department that needed to shift its focus.
“We had great lenders, but we were transactional,” Wiechert remembers. “We’d process a loan and move on to the next deal.”
The credit union competed on rates and convenience, and as of the third quarter of 2019, its business and commercial loan portfolios were each nearly three times larger than at asset-based peers.
MEMBER BUSINESS LOAN BALANCES
FOR CREDIT UNIONS $1B-$10B | DATA AS OF 09.30.19
STCU carried approximately $465 million in member business loans on its balance sheet in the third quarter of 2019. This total put the credit union among the top 25 nationally.
MEMBER COMMERCIAL LOAN BALANCES
FOR CREDIT UNIONS $1B-$10B | DATA AS OF 09.30.19
Since the NCUA introduced the commercial loan designation two years ago, STCU has grown this portfolio segment approximately 35%. The credit union’s third quarter balances in the portfolio nearly triple asset-based peers.
Wiechert did not take issue with the department’s loan balances but did see the opportunity to build lasting relationships with those members. Doing so would ensure stable growth; however, providing products and services beyond loans meant making changes to the credit union’s modus operandi.
In this Q&A, Wiechert discusses the importance of building relationships with business members, the challenges in changing employee habits, and a goal to eliminate the word “lending” from the department’s vocabulary.
When did you prioritize deepening relationships with business and commercial members when you started with STCU?
Brendan Wiechert, Director of Commercial and Business Services, STCU
Brendan Wiechert: When I came to the credit union, we had many active business loan broker relationships. We advertised our loans as low-rate and convenient, and for the most part, it wasn’t about the relationship with the member. I was afraid with that strategy, we would develop a “book it and forget it” mentality. Plus, members were paying broker fees when they could have come directly to us for the same rate.
We don’t want to be an order taker that approves loans, books loans, and moves on to the next loan. Building a relationship makes a member stickier. Whether it’s through deposits or merchant services, serving more than just lending needs benefits us down the road.
Changing to a relationships-first emphasis has been reflected in our advertising, as well. Through 2016, the tagline on our business ads was “Zoned for business,” and the copy focused on the products we offered. In 2017, we changed that to “Business. Partners.” with copy focused on the relationship and helping businesses achieve their goals.
How are you developing those relationships?
BW: We’re still working on the model, but, put simply, we want to get to know the member, understand their needs, and come back with a solution. We want members who are advocates for STCU and not just customers.
As far as what our model will look like, imagine a wheel that includes several stages: Awareness, Discovery, Education, Developing Interest, Building Trust, Acceptance, Use, Loyalty, Advocacy . It ends with a member introducing the credit union to someone else, which in effect starts the wheel all over. Importantly, however, asking for the business is not in our first few steps.
STCU does not begin its business banking relationship cycle with a sales pitch. It first develops a rapport and understanding of a member’s needs before suggesting products and services.
You’ve worked to strike the word “lender” and “lending” from certain job titles. When did you decide to do that?
BW: Pretty much as soon as I started here. I worked at two banks that called everyone a “relationship manager.” That may describe the role, but I think it is confusing to businesses, so we don’t use it. We want everyone to think more globally about being a complete, well-rounded "banker." We’re not afraid of that word. So, my staff is made up of business banking officers and commercial banking officers.
What’s the value in avoiding those words ?
BW: On the consumer side, STCU has always built long-term relationships with members and helped them meet their financial needs, no matter their stage of life. It's natural we would take that same approach with business members.
I don’t want my team focused solely on the loan, the transaction. I want them focused on the relationship. When I started, I saw prospect lists with names crossed off because those business owners didn’t need loans. We crossed them off and moved on rather than trying to find solutions that work for them.
This is a shift for the entire credit union, including our senior leadership who considered our team primarily loan focused. Interestingly, I report directly to the chief "lending" officer, but he understands only about half of businesses borrow while 100% need a deposit relationship.
What was the change in focus like for employees? Are there inherent challenges? How do you work around them?
CU QUICK FACTS
HQ: Liberty Lake, WA
Data as of 09.30.19
12-MO SHARE GROWTH: 10.1%
12-MO LOAN GROWTH: 10.6%
BW: I am no longer worried about a “book it and forget it” mentality, but we’re still in transition.
Three years ago, our officers were afraid to offer additional products, as they weren't as robust as we needed to be competitive. Our officers were concerned that offering additional products might actually hurt the lending relationship. That’s changed and improved with time.
Plus, it’s part of our review process now to see what the full relationship entails. That was an adjustment for all of them — they didn’t necessarily have relationships, they had accounts. So, we had to make that part of the conversation if we wanted it to stick and deepen member relationships. In the process, our business deposits and loans both increased by nearly 25% in 2019, and some of the ancillary cash management products we offer nearly doubled.
How did the organization prepare for the shift to the relationship focus?
BW: There’s a circular aspect to it. If you are going to go after the whole relationship, you need products and services to serve the full relationship. You can’t tell staff to go after it and not have adequate fraud protection, online banking, or checking accounts. The worst thing we could do is say we offer a full suite of business services and then not.
BW: We are continually improving products and services. We’ve got business banking, commercial banking, and cash management teams. We separate business from commercial based on aggregate credit and complexity, meaning a commercial banker might handle a more sophisticated member relationship. That said, we try to honor who brought in the relationship unless mitigating factors arise. Cash management officers focus on expanding the relationship with current members and do not have external production goals.
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We are currently posting for a business development officer to focus primarily on identifying new opportunities with businesses in targeted industries that may or may not have a lending need.
We’re on our way to becoming a core product for STCU and a first choice for the business members in our communities. But to get all the way there, we’ve got to be more than just a lender. We can’t offer 80% of what people need. We’ve got to provide a complete solution.
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